DEXTER boosts house flipping funding at a rapid pace

It has become an undisputed real estate and business trend over the last two years in Spain, and DEXTER has clearly opted for it. Given the housing shortage in our country, the lack of land to develop and build and, therefore, the scarcity of new developments in relation to demand, more and more developers have opted for the 'buy + renovation + sale' formula.

            They have done it and have been doing it both in large capitals and in coastal areas, in villas and apartment buildings, in medium-priced spaces and in those that look directly to the luxury segment, to the 'high standing'.

            As pointed out by the Risk Department at DEXTER its Senior Analyst, Rubén Miñarro: "Depending on the viability of each operation, we assess what we can provide financially for the purchase of the asset, which can be up to 60%, and to this we add 100% for the work".He adds that "These are usually very quick deals for the developer that pay for themselves in less than a year, with refurbishment and sale taking place at considerable speed..

            One piece of data is quite clarifying about the reason for this boom: in the Spanish market, 600,000 units were transacted in 2023 and of these, only 100,000 were new builds and the rest, 500,000 second hand, so in a way the 'house flipping' is helping to solve the lack of housing in Spain.

            There are companies that have perfectly identified their business plan and that are going to reform in a maximum of 4 months, knowing that the sale has to be carried out, at its price, in a maximum of 8 months. In this sense, Miñarro points out that "In the private equity alternative finance model, visibility of repayment is key, we can't let loans become entrenched, and in fast times there are entrepreneurs who look for extraordinary opportunities and take advantage of them, in constant rotation"..

            Similarly, house flipping is being encouraged by the fact that local councils are in many cases being favourable to changes of use from commercial or office space to residential.